Unlike the United States, which was downgraded to AA+ from AAA by S&P for the first time in its history, some states have been dramatically improving their short and long term debt outlook.
Ohio and Florida have recently been upgraded with Ohio going from AA+ negative to AA+ stable, and Florida actually improving to AAA.
Of course Ohio and Florida both have fiscally conservative, Republican governors, John Kasich and Rick Scott respectively. These governors have undergone fiscal reforms in their states to put them on more solid footing, and they have made concrete steps to improving the economic conditions of the state as well.
For instance, Florida “underwent significant cost cutting measures” according to S&P, and was “proactive in reducing expenditures to make up for revenue shortfalls.”
Ohio also underwent a significant reformation in spending priorities. It closed a massive budget deficit without raising any taxes while also reducing unemployment from 11.0 percent to 8.6 percent in just over a year. These are not great unemployment numbers, but show a clear move in the right direction, and they occurred while improving the state government’s overall finances.
Another successful, newly elected Republican governor has been the Governor of New Jersey, Chris Christie. Besides the financial benefits to his state, he may finally be receiving political benefits too.
According to a Monmoth University/NJ Press Media poll, Christie has an approval rating among registered voters of over 50 percent for the first time since being elected.
Christie has been aggressive in reducing the state’s debt and deficit, going after what he believes are the main drivers of that debt: unions and wasteful government projects. He plans to tackle pension reform and education reform in the future, but has already taken many of the steps necessary to bringing New Jersey’s finances under control.
The director of the Monmoth University Polling Institute, Patrick Murray, said of Christie, “Overall the public has never been particularly happy with the size of the cuts Gov. Christie has made in either of his budgets. However, they recognize New Jersey is in dire economic straits and continue to give the governor positive marks for leadership.”
This improvement in approval also comes just six months after Christie used line-item vetoes to remove a large amount of spending passed by the Democrat controlled New Jersey state legislature.
While cutting off funding for public workers and projects has certainly angered many across the state of New Jersey, the tough stances and aggressive tactics Christie used gave him respect from both natives of his home state as well as conservatives around the country.
The tough austerity measures that Kasich, Scott, and Christie have often hurt them politically in the short run, but may pay off in the long run both fiscally for their state and politically for themselves. It may also be a lesson for someone like the Governor of Wisconsin, Scott Walker, who has come under intense pressure from liberals and unions in his state.
Taking fiscally responsible measures can unleash a tempest of wild voter anger, but the long term results can dramatically transform a state’s long term outlook.